Deere & Company (NYSE:DE) reported first-quarter results that management said came in ahead of its internal forecast, supported by stronger-than-planned shipment volumes and improving order activity across several product lines. Equipment operations posted a 5.9% operating margin for the quarter, with the company highlighting the benefits of its diversified portfolio across end markets and geographies.
First-quarter results and segment performance
Net sales and revenues rose 13% year over year to $9.611 billion, while net sales for equipment operations increased 18% to $8.001 billion. Net income attributable to Deere was $656 million, or $2.42 per diluted share.
- Production and Precision Ag (PPA): Net sales of $3.163 billion increased 3%, driven primarily by foreign currency translation. Operating profit was $139 million, with a 4.4% operating margin. Management attributed the year-over-year profit decline to higher tariffs, unfavorable sales mix, and higher warranty expenses.
- Small Ag and Turf (SAT): Net sales rose 24% to $2.168 billion, due to higher shipment volumes and favorable currency translation. Operating profit increased to $196 million, resulting in a 9% operating margin. The company cited higher volumes, favorable mix, and positive price realization, partially offset by higher tariffs.
- Construction & Forestry (C&F): Net sales climbed about 34% to $2.67 billion on higher volumes and positive currency translation. Operating profit more than doubled to $137 million, producing a 5.1% operating margin. Deere said results benefited from shipment volumes and production efficiencies, partially offset by higher tariffs.
- Financial Services: First-quarter net income attributable to Deere was $244 million, up year over year mainly due to favorable financing spreads and a lower provision for credit losses, partially offset by favorable special items recorded in the prior-year quarter.
Market outlook: agriculture and construction
Deere maintained its expectation that the large ag equipment industry in the U.S. and Canada will decline 15% to 20% this year, while describing “encouraging developments” that it said should provide stability near term. Management pointed to robust commodity demand, a normalization of trade flows, and government programs supporting liquidity. Executives also discussed an improving used equipment environment and an aging fleet as factors that could support replacement demand.
For small ag and turf in the U.S. and Canada, Deere’s industry demand estimate remains flat to up 5%. Management said dairy and livestock profitability is supported by strong beef prices, while the turf market is seeing a modest return to growth after several years of declines.
Regionally, Deere said Europe is projected to be flat to up 5%, with manageable financing costs and resilience across key arable markets. In South America, industry sales of tractors and combines are now expected to be down about 5%, driven by Brazil, where Deere cited subdued commodity prices, high interest rates, and a stronger Brazilian real. Asia industry sales are projected to be flat to down 5%, with India expected to be down slightly from 2025 levels.
In construction, Deere raised its industry outlook for construction equipment and compact construction equipment in the U.S. and Canada to about 5% growth year over year. Management cited U.S. infrastructure spending, declining interest rates, strong rental demand, and data center construction starts. Global forestry markets are still expected to be flat, while global road building markets are now expected to be up about 5%, driven by North America and Europe.
Updated fiscal 2026 guidance and key drivers
Management said developments in the past three months reinforced its view that fiscal 2026 marks the bottom of the current cycle, with projected mid-single-digit net sales growth for equipment operations.
For fiscal 2026, Deere updated its outlook as follows:
- Net income: $4.5 billion to $5.0 billion.
- Effective tax rate: 25% to 27%.
- Equipment operations cash flow: $4.5 billion to $5.5 billion (raised by $500 million at both ends of the prior range).
- Financial Services net income: $840 million (increased primarily due to a lower provision for credit losses).
Segment forecasts included:
- PPA: Net sales down 5% to 10% for the full year; operating margin forecast remains 11% to 13%.
- SAT: Net sales now expected to be up about 15%; operating margin guide raised to 13.5% to 15%.
- C&F: Net sales now expected to be up about 15%; operating margin guide increased to 9% to 11%.
Pricing, tariffs, and cost management
Executives said the first quarter reflected better top line and margins than forecast primarily due to shipment volumes. In C&F, pricing was slightly negative during the quarter, and management revised full-year price realization expectations down by 0.5 percentage point, attributing the change to a delay in timing after the segment built backlog faster than expected. Management added that competitive price pressures have started to show signs of easing.
In PPA, pricing was neutral in the quarter. Deere said South America saw incremental incentives tied to foreign exchange movements and targeted field inventory reductions, but the company maintained its full-year price realization expectations for the segment.
On tariffs, Deere reiterated a projected $1.2 billion pre-tax impact for fiscal 2026, saying mitigation on Section 232 steel tariffs and some relief in India were offset by volume growth. Management also said that excluding tariffs, production costs were lower year over year across all segments in the first quarter, citing operational efficiencies from higher production and disciplined overhead spending. On the call, executives described a “price-cost neutral” expectation for the full year, inclusive of the incremental tariffs.
Order activity, inventories, and strategic initiatives
Deere highlighted improving order trends and inventory management, particularly in North American used equipment. Executives said used Deere combine inventory remained about 15% below its peak in March 2024, while high-horsepower tractor units declined more than 10% from the March 2025 peak. The company noted that model year 2022 and 2023 8R tractor inventories were down more than 40% over the same period.
In Brazil, Deere said combine inventories were higher than desired and it plans to underproduce retail for Brazilian combines in the second and third quarters to reduce levels, while noting its inventory-to-sales ratio remains significantly lower than competitors.
In Construction & Forestry, management said its order bank rose more than 50% during the quarter to the highest point since May 2024, providing visibility into the second half of the fiscal year. Executives also discussed upcoming product launches at CONEXPO, including Deere-designed 20-ton class excavators built in Kernersville, North Carolina, described as the first step in a multi-year excavator launch plan. The company said CONEXPO will feature 24 product launches, including equipment world premieres from John Deere and market debuts from the Wirtgen Group.
On the digital side, Deere said it completed the acquisition of Tenna, which management described as a fleet-focused platform intended to complement the company’s job-site strategy and prior acquisition of Virtual Superintendent. Executives emphasized that Tenna and Virtual Superintendent are intended to remain brand-agnostic to support mixed-fleet job sites.
During the Q&A, management also provided detail on technology adoption in combines, saying 99% of combines ordered through the early order program included some level of harvest automation, with nearly 80% selecting the “Ultimate” package. Deere also reported 500 million “Engaged Acres,” up more than 10% year over year.
Deere said it returned nearly $750 million to shareholders during the quarter through dividends and share repurchases.
About Deere & Company (NYSE:DE)
Deere & Company, commonly known by its brand John Deere, is a global manufacturer of agricultural, construction and forestry machinery, as well as turf care equipment and power systems. Founded in 1837 by blacksmith John Deere—who developed a polished steel plow to improve tillage in tough prairie soils—the company is headquartered in Moline, Illinois, and has grown into one of the largest and most recognizable names in equipment manufacturing worldwide.
The company’s principal businesses include a broad portfolio of agricultural equipment such as tractors, combines, planters, sprayers, harvesters and tillage implements, complemented by precision agriculture technologies and telematics that support farm management, yield optimization and equipment connectivity.
